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How Will RFS Decision Affect the Biofuel Industry?

The EPA's Renewable Fuel Standard decision is either a step forward or backward, depending on your point of view.

The Environmental Protection Agency announced Nov. 30 it is setting the total renewable fuel volume at 18 billion gallons for 2016, up from the proposal of 17.4 billion made earlier this year, but down from the 22.25 billion gallons in statue.

Timothy Rudnicki, Minnesota Bio-Fuels Association executive director, said his crystal ball is foggy on the effect of the decision on the biofuels industry.

"But to me it sends the wrong signal," he said. "It sends a negative message, and that is you can't count on the law upon which to build the infrastructure or the production capacity because it will be ... it can be lowered to accommodate the petroleum interest."

The American Fuel and Petrochemical Manufacturers issued a statement saying the decision is "an attempt by EPA to placate the biofuels lobby."

The Renewable Fuel Standard began in 2006 after being enacted through the Energy Policy Act of 2005. The RFS requirements were modified through the Energy Independence and Security Act of 2007.

Ethanol production in the United States has jumped from 6.5 billion gallons in 2007 to 14.3 billion gallons in 2014 and biodiesel production has grown from 0.5 billion gallons to 1.46 billion gallons during the same time period, according to the Energy Information Administration.

In their executive summary, the EPA said "while some stakeholders commented that reductions from the statutory targets would lead to a stagnation in growth, we disagree with this view.

"We proposed a 2016 volume requirement for total renewable fuel that was 1.1 billion gallons greater than the proposed 2015 volume requirement — a significant level of growth in one year," the summary reads.

Rudnicki said it's interesting the EPA, in their executive summary, writes "renewable fuels represent an opportunity for the U.S. to move away from fossil fuels towards a set of lower GHG transportation fuels and a chance for a still-developing low GHG technology sector to grow."

The RFS has been about energy security and reducing greenhouse gas emissions since its inception, Rudnicki said. It's good for the country, consumers, the environment and the economy. A study recently found 18,600-plus jobs in Minnesota are supported by the biofuels industry.

"If the petroleum industry just accepted the RFS — we know the production capacity is there — we could be exceeding where we're at today in terms of greenhouse gas reduction," he said.

The way the RFS stands now, it's hard to plan as the targets keep changing.

"For the EPA to have tinkered with the RFS and the renewable volume obligations was a big mistake," Rudnicki said. "It's like a slippery slope. Will it be changed next year? Will they find some reason to change the rule they've already set?"